COVID-19 battered employment in 2020, with unemployment and retrenchments spiking. In the first three quarters of 2021, the citizen unemployment rate has continued to improve – falling to 3.7% in 3Q 2021. With approximately 2,000 retrenchments in 3Q 2021, the rate has also reverted to pre-COVID-19 levels seen in 2018 and 2019.
Despite the various easing measures that the government introduced this year, including the current extension to the Stabilisation Phase until 21 November 2021, the economy is on track towards recovery. In fact, Singapore’s economy grew 6.5% in 3Q 2021, or 7.5% for the first three quarters of 2021. Travel is also on the recovery path with several Vaccinated Travel Lanes (VTLs) in place, and more to come.
As such, the government has accepted three wage guidelines from the National Wages Council (NWC) for December 2021 to November 2022.
Read Also: Guide To Understanding Singapore’s National Wages Council – And How They Affect Salaries
#1 Wages Should Rise In Tandem With Pace Of Business Recovery (And Based On Flexible Wage System)
With the economy and jobs market on the mend, the NWC has called on employers to ease any exceptional wage policies put in place earlier. NWC also recognises that despite the strong recovery, this has been uneven across the sectors, in particular for tourism and aviation businesses. Hence, using a clearly defined Flexible Wage System will make the business more resilient.
For employers that have recovered or are recovering, the NWC recommends (in order of priority):
1. Restore wage cuts implemented earlier. Fixed wage components should be restored first, followed by variable wage components.
2. Roll back wage-related cost savings measures (such as shorter work-weeks, temporary lay-offs and no-pay leave)
3. Grant built-in wage increases and variable payments. This should be commensurate with business performance, prospects and productivity growth, as well as employees’ contributions.
4. Roll back discretionary cost-saving measures (such as cuts in allowances)
For employers that continue to be adversely impacted:
1. Tap on government measures to accelerate business and workforce transformation. Retain, retrain and redeploy employees in affected business units into other roles within the company.
2. Consider non-wage cost-saving measures. Endeavour to pay the Annual Wage Supplement. This is especially to help lower-wage workers cope with their expenses.
3. Engage unions or employees to implement temporary wage cuts to minimise retrenchments if other measures have been exhausted. For employers who have not adopted the Flexible Wage System should do so.
#2 Ensuring Sustained Wage Growth For Lower-Wage Workers
COVID-19 shone a spotlight on the nature of work that Low-Wage Workers (LWWs) take up – they are typically considered as essential services. As society, Singapore needs to provide inclusive growth for all.
To ensure that lower wage workers see their remuneration rise faster than the median wage level, employers should include built-in wage increases of 4.5% to 7.5% of gross wages or $70 to $90 (whichever is higher), for workers earning a gross monthly wage of up to $2,000. This includes basic monthly wage, overtime payments, commissions, allowances and other regular cash payments.
Read Also: 5 Ways The Tripartite Workgroup For Lower Wage Workers Intends To Raise Salaries
For employers who are:
1. doing well and have experienced healthy revenue growth even during COVID-19, you should aim for the upper-bound of the range (i.e. 7.5% or $90 wage increases)
2. Recovering or have recovered may aim for the lower to middle segments of the range
3. Freezing or continuing to freeze wages should consider a built-in wage increase of up to $50 for lower wage workers instead
4. Implementing further wage reductions, should implement wage freeze for lower wage workers instead
Read Also: Progressive Wage Model: How Much Will Singapore Employers Have To Pay Their Workers
#3 Forge Ahead With Transforming Jobs And Upskilling Workforce
COVID-19 has accelerated the pace of economic transformation. This means employees need new skills for the jobs of the future. However, the percentage of employers that provided structured training fell to 65.4% in 2020, from 79.1% in 2019.
The NWC recommends that:
1. All employers offer structured training for their employees. Work with NTUC to establish Company Training Committees to build up in-house workplace learning capabilities. This will allow employees to keep pace with transformations in the workforce. Employers can also seek assistance from SNEF, Singapore Business Federation, NTUC LearningHub, or access consultancy services offered by the National Centre of Excellence for Workplace Learning (NACE) or join a SkillsFuture Queen Bee network where available.
2. Employers, together with their employees, must innovate and implement productivity initiatives, and work towards better wages and skills. Employers can redesign jobs by tapping support for the Job Redesign under the Productivity Solutions Grant (PSG-JR). Employers can also tap on the WSG’s Career Conversion Programmes to re-deploy employees at greater risk of redundancy. There are also SkillsFuture Work-Study programmes that provide a talent pipeline, providing fresh school leavers with opportunities to build on skills and knowledge.
3. Employees should support their employers in workforce and business transformation efforts
Subscribe To The DollarsAndSense Business Pass
Enjoy what you are reading and want more? Join The DollarsAndSense Business Pass and unlock access to valuable tools, exclusive networking opportunities, and tap into the wisdom of industry experts to fuel your business expansion!
